Solo 401K as Sole Proprietor

[Linda L.]

For a sole proprietor business with net income around $50-60K, if I like to include one family member(brother) in my solo 401K, what will be best structure to be cost effective and tax efficient?

To form a partnership or sole proprietor business issue him W2?

We both have other day jobs W2 income.

[Jeff Barnes]

If you turn him into a W2 employee, then you will no longer have a "solo" 401(k). All the benefits of a solo k go out the window when you hire employees even if it is your brother. Only your spouse can have the same solo k as you without disqualifying it as a solo k.